Busy season fraud prevention tips for retailers

Cybersource is offering advice to the retail trade on how to prepare themselves for dealing with fraud as the busy shopping season approaches

With the peak US shopping season having already started after Thanksgiving and with Christmas fast approaching, orders are stacking up for retailers and their systems will find themselves under pressure with a backlog of transactions. Not only will they slow down, but fraudulent purchases will most likely slip through the net. So, how can brands ensure that they are equipped to cope with peak season performance?

Tracy Bernasconi, Managed Risk Services at CyberSource, a payment and fraud management company owned by Visa, has offered the following tips for retailers:

1 Learn from the past

Before making any changes to your fraud strategy, take some time to review any trends from last Christmas. Did you have a problem reviewing orders in time? Were any particular products more susceptible to fraud?

If so, then make sure you are taking the correct precautions to ensure this doesn’t happen again. It’s not uncommon for fraudsters to target a specific retailer annually, so use your chargeback history to see what type of fraud you are being targeted with and identify any high risk areas.

2 Identify your priorities

After analysing previous fraud trends, you can begin to assess your priorities for the current season. Whether that’s reducing fraudulent orders, accepting more at Christmas, or a combination of the two - once you’ve established your goal, then you can put a plan in place to achieve it.

Your fraud strategy needs to accommodate any expected increase in turnover so considering turnover forecasts is also essential, particularly if you have a review process in place. For example if you manually review 10 per cent of all orders and currently process 10,000 orders a month – that’s 1,000 orders to review. However, if you expect your order volume to treble over Christmas, that’s 3,000 to review – a figure that may not be viable.

3 Review your rules

Shoppers spend more at Christmas and at different times of day, therefore your peak season fraud rules need to be adjusted accordingly. This could be raising the value of orders that are sent for review to cater for higher value orders, or relaxing velocity rules to cope with an increase in orders.

Similarly, look at “good” customer criteria, if a customer has been through the review process several times using the same email address, do you need to review the order? Auto-accepting these orders could save valuable time and enable staff to focus on higher risk orders.

Also, ensure rules are changed to reflect any past fraud trends. For example if last year fraud originated from Ireland, then make certain rules are tightened and all orders from this location are reviewed.

4 Think about the wider picture

eCommerce is not the only avenue for fraudsters looking to exploit peak season trading; peak season fraud can also originate via call centres. If fraudsters don’t get through online, they may try calling as a way to bypass the system (IP addresses can’t be checked over the phone).

So, if you have a call centre sales channel then take the time to educate staff about historic fraud trends and tell tale signs. This can be enhanced by maintaining an open and regular communication with your acquirer and conducting regular fraud analysis. Most have daily fraud reports which can be the difference between identifying a high scale fraud attack in progress as opposed to afterwards.

5 Don’t run out of time

With a number of different rules and factors to contend with, it’s not always possible to cover all bases. We all know there are delivery deadlines at Christmas and you don’t want to be left with 1,000 orders to review an hour before the cut off time.

By simply asking review staff to come in a bit earlier on days approaching the deadline you can ensure all orders are processed in time. Or if that’s not possible, then prioritise the biggest financial risks first – the high value items. A fraudulent order on a high value item can leave a big dent in your profits. So why not filter orders by amount, ensuring that those that can do the most damage in chargebacks are taken care of first.

6…don’t be scared

It may seem like a lot to contend with, but don’t panic - there is always help available. From identifying past trends, to defining your priorities and required rule changes, partnering with a trusted advisor in the payment sector can provide you with the guidance and support you need each step of the way.

By following these simple steps ahead of the busy period, you can be confident that you can grow your sales, whilst minimising the risk of fraud this Christmas.